UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K

(Mark One)

|X|   Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
      Act of 1934

                 For the fiscal year ended September 30, 2006 or

|_|   Transition report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

              For the transition period from _________ to _________

                          Commission file number 0-6508

                              IEC ELECTRONICS CORP.
             (Exact name of registrant as specified in its charter)

           Delaware                                               13-3458955
(State or other jurisdiction of                            (IRS Employer ID No.)
incorporation or organization)

                    105 Norton Street, Newark, New York 14513
          (Address of principal executive offices, including zip code)

        Registrant's telephone number, including area code: 315-331-7742

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.01 par value
                                (Title of Class)

      Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes |_| No |X|

      Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes |_| No |X|

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K |_|.

Indicate by check mark whether the registrant is a large accelerated filer, or a
non-accelerated filer. See definition of "accelerated filer and large
accelerated filer in Rule 12b-2 of the Exchange Act (Check one)

   |_| Large accelerated filer |_| Accelerated filer |X| Non-accelerated filer

      Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|

      The aggregate market value of shares of common stock held by
non-affiliates of the registrant was approximately $8,610,414 as of November 9,
2006, based upon the closing price of the registrant's common stock on the Over
The Counter Bulletin Board on such date. Shares of common stock held by each
executive officer and director and by each person and entity who beneficially
owns more than 5% of the outstanding common stock have been excluded in that
such person or entity under certain circumstances may be deemed to be an
affiliate. Such exclusion should not be deemed a determination or admission by
registrant that such individuals or entities are, in fact, affiliates of
registrant.

      As of November 10, 2006, there were outstanding 8,426,778 shares of Common
Stock.

Documents incorporated by reference:

      Portions of IEC Electronics Corp.'s Proxy Statement for the 2007 Annual
Meeting of Stockholders are incorporated into Part III of this Form 10-K.

<PAGE>

                              TABLE OF CONTENTS

                                     PART I                                 PAGE
                                                                            ----
Item 1:  Business........................................................      3
Item 1A: Risk Factors....................................................      5
Item 1B: Unresolved Staff Comments.......................................      9
Item 2:  Properties......................................................      9
Item 3:  Legal Proceedings...............................................      9
Item 4:  Submission of Matters to a Vote of Security Holders.............     10
         Executive Officers of Registrant................................     10

                                     PART II

Item 5:  Market for Registrant's Common Equity, Related Stockholder
           Matters, and Issuer Purchases of Equity Securities............     11
Item 6:  Selected Consolidated Financial Data............................     12
Item 7:  Management's Discussion and Analysis of Financial
           Condition and Results of Operations...........................     13
Item 7A: Quantitative and Qualitative Disclosures about Market Risk......     16
Item 8:  Financial Statements and Supplementary Data.....................     16
Item 9:  Changes in and Disagreements with Accountants
           on Accounting and Financial Disclosure........................     16
Item 9A: Controls and Procedures.........................................     16
Item 9B: Other Information...................... ........................     16

                                    PART III

Item 10: Directors, Executive Officers, and Corporate Governance.........     17
Item 11: Executive Compensation..........................................     17
Item 12: Security Ownership of Certain Beneficial Owners and
           Management and Related Stockholder Matters....................     17
Item 13: Certain Relationships, Related Transactions and
         Director Independence...........................................     17
Item 14: Principal Accountant Fees and Services..........................     17

                                    PART IV

Item 15: Exhibits and Financial Statement Schedules......................     17

                  "SAFE HARBOR" CAUTIONARY STATEMENT UNDER THE
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

      This Annual Report on Form 10-K contains certain statements that are, or
may be deemed to be, forward-looking statements within the meaning of
section-27A of the Securities Act of 1933 and section-21E of the Securities
Exchange Act of 1934, and are made in reliance upon the protections provided by
such Acts for forward-looking statements. These forward-looking statements (such
as when we describe what we "believe", "expect" or "anticipate" will occur, and
other similar statements) include, but are not limited to, statements regarding
future sales and operating results, future prospects, the capabilities and
capacities of business operations, any financial or other guidance and all
statements that are not based on historical fact, but rather reflect our current
expectations concerning future results and events. The ultimate correctness of
these forward-looking statements is dependent upon a number of known and unknown
risks and events, and is subject to various uncertainties and other factors that
may cause our actual results, performance or achievements to be different from
any future results, performance or achievements expressed or implied by these
statements. The following important factors, among others, could affect future
results and events, causing those results and events to differ materially from
those expressed or implied in our forward-looking statements: business
conditions and growth in our customer's industries, the electronic manufacturing
services industry and the general economy, variability of operating results, our
dependence on a limited number of major customers, the potential consolidation
of our customer base, availability of components, dependence on certain
industries, variability of customer requirements, other economic, business and
competitive factors affecting our customers, our industry and business generally
and other factors that we may not have currently identified or quantified. For a
further list and description of various risks, relevant factors and
uncertainties that could cause future results or events to differ materially
from those expressed or implied in our forward-looking statements, see the "Risk
Factors" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" sections elsewhere in this document. All forward-looking
statements included in this Report on Form-10-K are made only as of the date of
this Report on Form-10-K, and we do not undertake any obligation to publicly
update or correct any forward-looking statements to reflect events or
circumstances that subsequently occur or which we hereafter become aware of. You
should read this document and the documents that we incorporate by reference
into this Annual Report on Form-10-K completely and with the understanding that
our actual future results may be materially different from what we expect. We
may not update these forward-looking statements, even if our situation changes
in the future. All forward-looking statements attributable to us are expressly
qualified by these cautionary statements.


                                  Page 2 of 38

<PAGE>

                                     PART I

ITEM 1. BUSINESS

Overview

      IEC Electronics Corp. ("IEC", "We", "Our", the "Company") is an
independent electronics manufacturing services ("EMS") provider of complex
printed circuit board assemblies and electronic products and systems. We provide
high quality electronics manufacturing services with state-of-the-art
manufacturing capabilities. Utilizing automated manufacturing and test
equipment, IEC provides manufacturing services employing surface mount
technology ("SMT") and pin-through-hole ("PTH") interconnection technologies. As
an independent full-service EMS provider, we offer our customers a wide range of
manufacturing services, on either a turnkey or consignment basis. These services
include product development, prototype assembly, material procurement, volume
assembly, test engineering support, statistical quality assurance, order
fulfillment and repair services. Our strategy is to cultivate strong
manufacturing relationships with established and emerging original equipment
manufacturers ("OEMs").

      IEC Electronics Corp., a Delaware corporation, is the successor by merger
in 1990 to IEC Electronics Corp., a New York corporation, which was organized in
1966.

      IEC is a world-class ISO:9001-2000 certified company. Our manufacturing
processes encompass the best aspects of Lean Manufacturing and Six Sigma
Principles. IEC is an FDA registered contract manufacturer of medical devices,
is ITAR registered and compliant, and is COMSEC certified. Many customers
consider these certifications crucial when qualifying their EMS providers.

      Our New York facility is self-certified to previously recognized British
Approvals Board Telecommunications standards, allowing us to provide
manufacturing and test services to manufacturers producing telecommunication
equipment destined for shipment to the European Common Market. Our
state-of-the-art 10,000 square foot Technology Center includes pilot build,
prototype assembly, design engineering services, and an Advanced Materials
Technology Laboratory.

      We continually evaluate emerging technology and maintain a technology road
map to ensure relevant processes are available to our customers when commercial
and design factors so indicate. The current generation of interconnection
technologies includes chip scale packaging and ball grid array (BGA) assembly
techniques. We have placed millions of plastic BGA's since 1994 and added
Ceramic BGA placement for networking customers to our service offerings in
fiscal 2001. Future advances will be directed by our Technology Center, which
combines Prototype and Pilot Build Services with the capabilities of our
Advanced Materials Technology Laboratory, and is supported by our Design
Engineering Group.

      Our experienced workforce has a high level of technical expertise. Our
emphasis is on building the most challenging complete systems serving original
equipment manufacturers with advanced electronics technology. IEC has positioned
itself as a leader of lead-free solder assembly technology through early
development and technical publications. Lead-free was mandated by July 2006 for
many electronic products sold in Europe.

      Our executive offices are located at 105 Norton Street, Newark, New York
14513. Our telephone number is (315)331-7742, and our Internet address is
www.iec-electronics.com.

Electronics Manufacturing Services: The Industry

      The EMS industry specializes in providing program management, technical
support and manufacturing expertise required to take a product from the early
design and prototype stages through volume production and distribution.
Primarily as a response to rapid technological change and increased competition
in the electronics industry, OEMs have recognized that by utilizing EMS
providers they can improve their competitive position, realize an improved
return on investment and concentrate on their core competencies such as
research, product design and development and marketing. In addition, EMS
providers allow OEMs to bring new products to market rapidly and adjust more
quickly to fluctuations in product demand; avoid additional investment in plant,
equipment and personnel; reduce inventory and other overhead costs; and
establish known unit costs over the life of a contract. Many OEMs now consider
EMS providers an integral part of their business and manufacturing strategy.

      OEMs increasingly require EMS providers to provide complete turnkey
manufacturing and material handling services, rather than working on a
consignment basis in which the OEM supplies all materials and the EMS provider
supplies labor. Turnkey contracts involve design, manufacturing and engineering
support, the procurement of all materials, and sophisticated in-circuit and
functional testing and distribution.


                                  Page 3 of 38

<PAGE>

IEC's Strategy

      Our strategy is to cultivate strong manufacturing partnerships with
established and emerging OEMs in the electronics industry. These long-term
business partnerships involve the joint development of manufacturing and support
strategies with OEM customers and promote customer satisfaction. In implementing
this strategy, we offer our customers a full range of manufacturing solutions
through flexibility in production, high quality and fast-turnaround
manufacturing services and computer-aided testing.

      We generally enter into formal agreements with our significant customers.
These agreements generally provide for fixed prices for one year, absent any
customer changes which impact cost of labor or material, and rolling forecasts
of customer requirements. After establishing an OEM relationship, we offer our
consultation services with respect to the manufacturability and testability of
the product design. We often recommend design changes to reduce manufacturing
costs and to improve the quality of the finished assemblies.

Products and Services

      We manufacture a wide range of assemblies, which are incorporated into
many different products. We provide electronic manufacturing services primarily
for telecommunications and wireless communication systems, test diagnostic
equipment, military and defense systems, transportation products, alternative
energy equipment, and medical instrumentation. During the fiscal year ended
September 30, 2006 we provided electronics manufacturing services to
approximately 25 different customers. We provide our services to multiple
divisions and product lines of many of our customers and typically manufacture
for a number of each customer's successive product generations. In some cases,
we are the sole contract manufacturer for the customer site or division,
providing all services, prototype through box build and functional test.

Materials Management

      We generally procure material only to meet specific contract requirements.
In addition, our agreements with our significant customers generally provide for
cancellation charges equal to the costs, which are incurred by us as a result of
a customer's cancellation of contracted quantities. Our internal systems provide
effective controls for all materials, whether purchased by us or provided by the
customer, through all stages of the manufacturing process, from receiving to
final shipment.

Availability of Components

      Substantially all of our net sales are derived from turnkey manufacturing
in which we provide both materials procurement and assembly services. We are
well positioned with supplier relationships and material procurement expertise
to acquire needed materials. However, availability of customer-consigned parts
and unforeseen shortages of components on the world market are beyond our
control and could adversely affect revenue levels and operating efficiencies.

Suppliers

      We have a Master Distribution Program in place with Arrow Electronics.
This alliance has the benefit of reducing lead time on program parts, reducing
the quotation process timetable, providing competitive pricing, providing some
protection during periods of component allocation, providing better payment
terms, reducing overhead cost, providing access to in-house stores and providing
access to global resources. We also have preferred supplier partnership
agreements in place for commodities such as printed circuit boards, metals, and
cable harnesses

Marketing and Sales

      Our sales increased during 2006, primarily due to the addition of several
new customers. These customers are expected to generate further revenue growth
during 2007. We utilize a direct sales force as well as a nationwide network of
Manufacturers Representatives. Through this hybrid sales approach, we execute a
focused sales strategy targeting only those customers with product profiles
aligning with our core areas of expertise. For example, we are focusing on
customers developing complex, advanced technology products for a wide array of
market sectors ranging from toxic gas monitoring and detection through satellite
communications, medical, military and general industrial.

      Typically, the demand profiles associated with these customers are in the
low to moderate volume range with high variability of mix requirements and end
item configurations. In fact, these products often represent emerging
technologies requiring high intensity of manufacturing support to seamlessly
transfer them from the early product development stage through prototyping onto
volume manufacturing. As these products exit the product development phase,
specialized capabilities are required to support rapid response prototyping
requirements in a dynamic engineering change environment. As a result, the usual
industry outsourcing models associated with these customers rarely include
supply alternatives in low cost labor regions such as Asia and Mexico.


                                  Page 4 of 38

<PAGE>

      Overall, our sales efforts are supported by advertising in trade media,
sales literature, Internet website, customer presentations, participation in
trade shows and direct mail promotions. Sales leads resulting from these
marketing activities are assigned to a representative covering a customer's
location for qualification and further development. Referrals by existing
customers are one of our largest sources of new opportunities.

Backlog

      Our backlog as of September 30, 2006 and 2005 was approximately $21.7
million and $2.5 million, respectively. Backlog consists of contracts or
purchase orders with delivery dates scheduled within the next 12 months.
Substantially the entire current backlog is expected to be shipped within our
current fiscal year. Variations in the magnitude and duration of contracts
received by us, and customer delivery requirements may result in substantial
fluctuations in backlog from period to period.

Governmental Regulation

      Our operations are subject to certain federal, state and local regulatory
requirements relating to environmental, waste management, health and safety
matters. Management believes that our business is operated in compliance with
applicable regulations promulgated by the Occupational Safety and Health
Administration and the Environmental Protection Agency and corresponding state
agencies, which respectively, pertain to health and safety in the work place and
the use, discharge, and storage of chemicals employed in the manufacturing
process. Current costs of compliance are not material to us. However, new or
modified requirements, not presently anticipated, could be adopted creating
additional expense for us.

Employees

      IEC's employees numbered 240 at November 9, 2006, including 205 employees
engaged in manufacturing, 23 in engineering, and 12 in administrative and
marketing functions. None of our employees are covered by a collective
bargaining agreement. We have not experienced any work stoppages and believe
that our employee relations are good. We have access to a large work force by
virtue of our northeast location midway between Rochester and Syracuse, two
upstate New York industrial cities.

Patents and Trademarks

      We hold patents unrelated to electronics manufacturing services and also
employ various registered trademarks. We do not believe that either patent or
trademark protection is material to the operation of our business.

ITEM 1A. RISK FACTORS

OUR OPERATING RESULTS MAY FLUCTUATE DUE TO A NUMBER OF FACTORS, MANY OF WHICH
ARE BEYOND OUR CONTROL.

      Our annual and quarterly results may vary significantly depending on
factors, including:

            o     adverse changes in general economic conditions

            o     the level and timing of customer orders and the accuracy of
                  their forecasts

            o     the level of capacity utilization of our manufacturing
                  facility and associated fixed costs

            o     the composition of the costs of revenue between materials,
                  labor and manufacturing overhead

            o     price competition

            o     our level of experience in manufacturing a particular product

            o     the degree of automation used in our assembly process

            o     the efficiencies achieved in managing inventories and fixed
                  assets

            o     fluctuations in materials costs and availability of materials

            o     the timing of expenditures in anticipation of increased sales,
                  customer product delivery requirements and shortages of
                  components or labor.

      The volume and timing of orders placed by our customers may vary due to
variation in demand for our customers' products, our customers' inventory
management, new product introductions and manufacturing strategy changes, and
consolidations among our customers. In the past, changes in customer orders have
had a significant effect on our results of operations due to corresponding
changes in the level of overhead absorption. Any one or a combination of these
factors could adversely affect our annual and quarterly results of operations in
the future.


                                  Page 5 of 38

<PAGE>

BECAUSE WE DEPEND ON A LIMITED NUMBER OF CUSTOMERS, A REDUCTION IN SALES TO ANY
ONE OF OUR CUSTOMERS COULD CAUSE A SIGNIFICANT DECLINE IN OUR REVENUE.

      A small number of customers are responsible for a significant portion of
our net sales. During fiscal 2006, 2005, and 2004, our five largest customers
accounted for 66%, 67% and 76% of consolidated net sales, respectively. The
percentage of IEC's sales to its major customers may fluctuate from period to
period.

      We are dependent upon the continued growth, viability and financial
stability of our customers whose industries have experienced rapid technological
change, short product life cycles, consolidation, and pricing and margin
pressures. Any consolidation among our customers could further reduce the number
of customers that generate a significant percentage of our revenues and exposes
us to increased risks relating to dependence on a small number of customers. A
significant reduction in sales to any of our customers or a customer exerting
significant pricing and margin pressures on us, would have a material adverse
effect on our results of operations. We cannot assure you that present or future
customers will not terminate their manufacturing arrangements with us or
significantly change, reduce or delay the amount of manufacturing services
ordered from us. If they do, it could have a material adverse effect on our
results of operations. In addition, we generate significant account receivables
in connection with providing manufacturing services to our customers. If one or
more of our customers were to become insolvent or otherwise were unable to pay
for the manufacturing services provided by us, our operating results and
financial condition would be adversely affected.

OUR CUSTOMERS MAY BE ADVERSELY AFFECTED BY RAPID TECHNOLOGICAL CHANGE.

      Our customers compete in markets that are characterized by rapidly
changing technology, evolving industry standards and continuous improvements in
products and services. These conditions frequently result in short product life
cycles. Our success will depend largely on the success achieved by our customers
in developing and marketing their products. If technologies or standards
supported by our customers' products become obsolete or fail to gain widespread
commercial acceptance, our business could be materially adversely affected.

WE DEPEND ON THE ELECTRONICS INDUSTRY, WHICH CONTINUALLY PRODUCES
TECHNOLOGICALLY ADVANCED PRODUCTS WITH SHORT LIFE CYCLES; OUR INABILITY TO
CONTINUALLY MANUFACTURE SUCH PRODUCTS ON A COST-EFFECTIVE BASIS WOULD HARM OUR
BUSINESS.

      Factors affecting the electronics industry in general could seriously harm
our customers and, as a result, us. These factors include:

            o     the inability of our customers to adapt to rapidly changing
                  technology and evolving industry standards, which result in
                  short product life cycles;

            o     the inability of our customers to develop and market their
                  products, some of which are new and untested;

            o     the potential that our customers' products may become obsolete
                  or the failure of our customers' products to gain widespread
                  commercial acceptance; and

            o     recessionary periods in our customers' markets.

If any of these factors materialize or if we are unable to offer technologically
advanced, cost effective, quick response manufacturing service to customers,
demand for our services would decline and our business would suffer.

MOST OF OUR CUSTOMERS DO NOT COMMIT TO LONG-TERM PRODUCTION SCHEDULES, WHICH
MAKES IT DIFFICULT FOR US TO SCHEDULE PRODUCTION AND ACHIEVE MAXIMUM EFFICIENCY
OF OUR MANUFACTURING CAPACITY.

      The volume and timing of sales to our customers may vary due to:

            o     variation in demand for our customers' products

            o     our customers' attempts to manage their inventory

            o     electronic design changes

            o     changes in our customers' manufacturing strategy

            o     acquisitions of or consolidations among customers

            o     recessionary conditions in customers' industries

      Due in part to these factors, most of our customers do not commit to firm
production schedules for more than one quarter in advance. Our inability to
forecast the level of customer orders with certainty makes it difficult to
schedule production and maximize utilization of manufacturing capacity. In the
past, we have been required to increase staffing and other expenses in order to
meet the anticipated demand of our customers. Anticipated orders from many of
our customers have, in the past, failed to materialize or delivery schedules
have been deferred as a result of changes in our customers' business needs,
thereby adversely affecting our results of operations. On other occasions, our
customers have required rapid increases in production, which have placed an
excessive burden on our resources. Such customer order fluctuations and
deferrals could have a material adverse effect on us in the future.


                                  Page 6 of 38

<PAGE>

OUR CUSTOMERS MAY CANCEL THEIR ORDERS, CHANGE PRODUCTION QUANTITIES OR DELAY
PRODUCTION.

      Electronics manufacturing service providers must provide increasingly
rapid product turnaround for their customers. We generally do not obtain firm,
long-term purchase commitments from our customers and we continue to experience
reduced lead-times in customer orders. Customers may cancel their orders, change
production quantities or delay production for a number of reasons. The success
of our customers' products in the market affects our business. Cancellations,
reductions or delay by a significant customer or by a group of customers could
negatively impact our operating results.

      In addition, we make significant decisions, including determining the
levels of business that we will seek and accept, production schedules, component
procurement commitments, personnel needs and other resource requirements, based
on our estimate of customer requirements. The short-term nature of our
customers' commitments and the possibility of rapid changes in demand for their
products reduces our ability to accurately estimate the future requirements of
those customers. Because many of our costs and operating expenses are relatively
fixed, a reduction in customer demand can harm our gross margins and operating
results. On occasion, customers may require rapid increases in production, which
can stress our resources and reduce operating margins.

WE COMPETE WITH NUMEROUS PROVIDERS OF ELECTRONIC MANUFACTURING SERVICES,
INCLUDING OUR CURRENT OR POTENTIAL CUSTOMERS WHO MAY DECIDE TO MANUFACTURE ALL
OF THEIR PRODUCTS INTERNALLY.

      The electronic manufacturing services business is highly competitive. We
compete against numerous domestic and foreign manufacturers with global
operations as well as those who operate on a local or regional basis. Many of
our competitors have international operations and some have substantially
greater manufacturing, financial, research and development, and marketing
resources than us. We also face potential competition from the manufacturing
operations of our current and potential customers, who are continually
evaluating the merits of manufacturing products internally versus the advantages
of outsourcing.

INCREASED COMPETITION MAY RESULT IN DECREASED DEMAND OR PRICES FOR OUR SERVICES.

      We may be operating at a cost disadvantage compared to manufacturers who
have greater direct buying power from component suppliers, distributors and raw
material suppliers or who have lower cost structures as a result of their
geographic location or the services they provide. As a result, competitors may
have a competitive advantage. Our manufacturing processes are generally not
subject to significant proprietary protection, and companies with greater
resources or a greater market presence may enter our market or increase their
competition with us. We also expect our competitors to continue to improve the
performance of their current products or services, to reduce their current
products or service sales prices and to introduce new products or services that
may offer greater performance and improved pricing. Any of these could cause a
decline in sales, loss of market acceptance of our products or services, profit
margin compression, or loss of market share.

IF WE DO NOT MANAGE OUR BUSINESS EFFECTIVELY, OUR PROFITABILITY COULD DECLINE.

      Our ability to manage our business effectively will require us to continue
to implement and improve our operational, financial and management information
systems; continue to develop the management skills of our managers and
supervisors; and continue to train, motivate and manage our employees. Our
failure to effectively do so could have a material adverse effect on our results
of operations.

WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS FOR COMPONENTS THAT ARE CRITICAL TO
OUR MANUFACTURING PROCESSES. A SHORTAGE OF THESE COMPONENTS OR AN INCREASE IN
THEIR PRICE COULD INTERRUPT OUR OPERATIONS AND REDUCE OUR PROFITS.

      Substantially all of our net revenue is derived from turnkey manufacturing
in which we provide materials procurement. While many of our customer contracts
permit quarterly or other periodic adjustments to pricing based on decreases and
increases in component prices and other factors, we typically bear the risk of
component price increases that occur between any such re-pricing or, if such
re-pricing is not permitted, during the balance of the term of the particular
customer contract. Accordingly, certain component price increases could
adversely affect our gross profit margins. Almost all of the products we
manufacture require one or more components that are available from a limited
number of suppliers. Some of these components are allocated from time to time in
response to supply shortages. In some cases, supply shortages will substantially
curtail production of all assemblies using a particular component. In addition,
at various times industry wide shortages of electronic components have occurred.
Such circumstances have produced insignificant levels of short-term interruption
of our operations, but could have a material adverse effect on our results of
operations in the future.


                                  Page 7 of 38

<PAGE>

OUR TURNKEY MANUFACTURING SERVICES INVOLVE INVENTORY RISK

      Most of our services are provided on a turnkey basis, where we purchase
some or all of the materials required for designing, product assembling and
manufacturing. These services involve greater resource investment and inventory
risk management than consignment services, where the customer provides
materials. Accordingly, various component price increases and inventory
obsolescence could adversely affect our selling price, gross margins and
operating results. In our turnkey operations, we must order parts and supplies
based on customer forecasts, which may be for a larger quantity of product than
is included in the firm orders ultimately received from those customers.
Customers' cancellation or reduction of orders can result in expenses to us.
While our customer agreements typically include provisions which require
customers to reimburse us for excess inventory specifically ordered to meet
their forecasts, we may not be able to collect on these obligations. In that
case, we could have excess inventory and/or cancellation or return charges from
our supplies.

PRODUCTS WE MANUFACTURE MAY CONTAIN DESIGN OR MANUFACTURING DEFECTS, WHICH COULD
RESULT IN REDUCED DEMAND FOR OUR SERVICES AND LIABILITY CLAIMS AGAINST US.

      We manufacture products to our customers' specifications, which are highly
complex and may, at times, contain design or manufacturing errors or failures.
Despite our quality control and quality assurance efforts, defects may occur.
Defects in the products we manufacture, whether caused by a design,
manufacturing or component failure or error, may result in delayed shipments to
customers or reduced or cancelled customer orders and may affect our business
reputation. In addition, these defects may result in liability claims against
us. Even if customers or component suppliers are responsible for the defects,
they may be unwilling or unable to assume responsibility for any costs or
payments.

WE MAY NOT BE ABLE TO MAINTAIN OUR ENGINEERING, TECHNOLOGICAL AND MANUFACTURING
PROCESS EXPERTISE.

      The markets for our manufacturing and engineering services are
characterized by rapidly changing technology and evolving process development.
The continued success of our business will depend upon our ability to:

            o     hire, retain and expand our qualified engineering and
                  technical personnel;

            o     maintain technological leadership;

            o     develop and market manufacturing services that meet changing
                  customer needs; and

            o     successfully anticipate or respond to technological changes in
                  manufacturing processes on a cost-effective and timely basis.

      Although we believe that our operations provide the assembly and testing
technologies, equipment and processes that are currently required by our
customers, we cannot be certain that we will develop the capabilities required
by our customers in the future. The emergence of new technology industry
standards or customer requirements may render our equipment, inventory or
processes obsolete or noncompetitive. In addition, we may have to acquire new
assembly and testing technologies and equipment to remain competitive. The
acquisition and implementation of new technologies and equipment may require
significant expense or capital investment, which could reduce our operating
margins and our operating results. Our failure to anticipate and adapt to our
customers' changing technological needs and requirements could have an adverse
effect on our business.

WE DO NOT HAVE EMPLOYMENT AGREEMENTS WITH ANY OF OUR KEY PERSONNEL, THE LOSS OF
WHICH COULD HURT OUR OPERATIONS.

      Our continued success depends largely on the efforts and skills of our key
managerial and technical employees. The loss of the services of certain of these
key employees or an inability to attract or retain qualified employees could
have a material adverse effect on us. We do not have employment agreements or
non-competition agreements with our key employees.

COMPLIANCE OR THE FAILURE TO COMPLY WITH CURRENT AND FUTURE ENVIRONMENTAL
REGULATIONS COULD CAUSE US SIGNIFICANT EXPENSE.

      We are subject to a variety of federal, state, local and foreign
environmental regulations relating to the use, storage, discharge and disposal
of hazardous chemicals used during our manufacturing process. If we fail to
comply with any present and future regulations, we could be subject to future
liabilities or the suspension of production. In addition, such regulations could
restrict our ability to expand our facilities or could require us to acquire
costly equipment, or to incur other significant expenses to comply with
environmental regulations.


                                  Page 8 of 38

<PAGE>

THE AGREEMENTS GOVERNING OUR EXISTING DEBT CONTAIN VARIOUS COVENANTS THAT IMPACT
UPON THE OPERATION OF OUR BUSINESS.

      The agreements and instruments governing our existing debt and our secured
credit facility contain various restrictive covenants that, among other things,
require us to comply with or maintain certain financial tests and ratios
including, among others, limitations on the amount available under the revolving
line of credit relative to the borrowing base, capital expenditures and minimum
earnings before interest, taxes, depreciation and amortization (EBITDA) and
restrict our ability to:

            o     incur debt;

            o     incur or maintain liens;

            o     make acquisitions of businesses or entities;

            o     make investments, including loans, guarantees and advances;

            o     engage in mergers, consolidations or certain sales of assets;

            o     engage in transactions with affiliates; and

            o     pay dividends or engage in stock redemptions.

      Our credit facilities are secured by a general security agreement covering
receivables, inventory, equipment, intangibles, investment property and deposit
accounts and indirectly by a first mortgage on our Newark plant.

      Our ability to comply with covenants contained in our existing debt and
our secured credit facility may be affected by events beyond our control,
including prevailing economic, financial and industry conditions. Our failure to
comply with our debt-related covenants could result in an acceleration of our
indebtedness and cross-defaults under our other indebtedness, which may have a
material adverse effect on our financial condition. We are currently in
compliance with all of our covenants.

OUR STOCK PRICE MAY BE VOLATILE DUE TO FACTORS BEYOND OUR CONTROL

      Our common stock is traded on the Over-the-Counter Bulletin Board. The
market price of our common stock has fluctuated substantially in the past and
could fluctuate substantially in the future, based on a variety of factors,
including future announcements concerning us or our key customers or
competitors, government regulations, litigation, changes in earnings estimates
by analysts, fluctuations in quarterly operating results, or general conditions
in the EMS industry.

ITEM 1B. UNRESOLVED STAFF COMMENTS

      Not Applicable

ITEM 2. PROPERTIES

      Our administrative and manufacturing facility is located in Newark, New
York and contains an aggregate of approximately 300,000 square feet.

ITEM 3. LEGAL PROCEEDINGS

      Except as set forth below, there are no material legal proceedings pending
to which IEC or any of its subsidiaries is a party or to which any of IEC's or
subsidiaries' property is subject. To our knowledge, there are no material legal
proceedings to which any director, officer or affiliate of IEC, or any
beneficial owner of more than 5 percent (5%) of Common Stock, or any associate
of any of the foregoing, is a party adverse to IEC or any of its subsidiaries.

      On August 13, 2003 General Electric Company ("GE") commenced an action in
the state of Connecticut against IEC and Vishay Intertechnology, Inc.
("Vishay"). The action alleges cause of action for breach of a manufacturing
services contract, which had an initial value of $4.4 million, breach of express
warranty, breach of implied warranty, and a violation of the Connecticut Unfair
Trade Practices Act. Vishay supplied a component that IEC used to assemble
printed circuit boards for GE that GE contends failed to function properly
requiring a product recall. GE claims damages "in excess of $15,000" plus
interest and attorney's fees. IEC made a motion to dismiss the action in
Connecticut for lack of jurisdiction. During the pendency of the motion, IEC
filed for a protective cross claim against Vishay, and GE filed a second action
against IEC and Vishay in New York State Supreme Court as a protective measure
in the event that its Connecticut action were dismissed. In March 2006, the New
York action was voluntarily discontinued by consent of all the parties. IEC and
Vishay are proceeding to defend GE's Connecticut action on the merits and IEC is
proceeding with its cross claim against Vishay. IEC has made a motion for
summary judgment which is pending. The position of the Company is that the
contract with GE was substantially completed and that it has meritorious
defenses and basis for a cross claim against Vishay.


                                  Page 9 of 38

<PAGE>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of fiscal 2006, no matters were submitted to vote of
security holders.

EXECUTIVE OFFICERS OF THE REGISTRANT

IEC's executive officers as of September 30, 2006, were as follows:

Name                    Age   Position
---------------------   ---   --------------------------------------------------
W. Barry Gilbert         60   President, Chairman of the Board, and
                              Chief Executive Officer

Jeffrey T. Schlarbaum    40   Vice President of Sales and Marketing

Brian H. Davis           52   Vice President, Chief Financial Officer and
                              Controller

Donald S. Doody          40   Vice President of Operations

      W. Barry Gilbert has served as Chief Executive Officer since June 2002. He
has been a director of IEC since February 1993, and Chairman of the Board since
February 2001. He is an adjunct faculty member at the William E. Simon Graduate
School of Business Administration of the University of Rochester. Mr. Gilbert
previously held the position of President of the Thermal Management Group of
Bowthorpe (now known as Spirent) and was corporate Vice President and President
of the Analytical Products Division of Milton Roy Company, a manufacturer of
analytical instrumentation.

      Jeffrey T. Schlarbaum joined IEC in May 2004 as Vice President of Sales
and Marketing. He has over 15 years of sales experience in the electronics
industry most recently serving as Regional Vice President of Sales for Plexus
Corp., a contract manufacturer of electronics products, Neenah, Wisconsin. Prior
to that, he worked as Vice President of Sales, Eastern Region for MCMS as well
as holding various senior sales and marketing management positions with MACK
Technologies and Conner Peripherals. He holds a Bachelors of Business
Administration degree from National University, and an MBA from Pepperdine
University.

      Brian H. Davis joined IEC in April 2003 as Vice President, Chief Financial
Officer and Controller. Mr. Davis previously served as Vice President of Finance
at Thermo Spectronic, a manufacturer of laboratory equipment located in
Rochester, NY. Prior to that, Mr. Davis functioned in various Controller and
General Management positions with Life Sciences International and Milton Roy
Company. He holds a B.S. in Accounting from the Pennsylvania State University,
and an MBA from the Rochester Institute of Technology.

      Donald S. Doody joined IEC in November 2004 and has more than 8 years of
experience in the contract electronics manufacturing industry. He started his
career with GE Transportation and Industrial Systems and became a Master Black
Belt/Supplier Quality Engineer. Mr. Doody was a senior manufacturing engineer at
Plexus Corporation, then became VP/GM of MCMS's North Carolina facility. When
Plexus acquired MCMS he became responsible for leading Lean Manufacturing and
Six Sigma initiatives throughout the company. Mr. Doody holds a Bachelor's in
Engineering from the State University of New York, Buffalo and a Master's degree
in Industrial Science from Colorado State University.


                                  Page 10 of 38
<PAGE>

                                     PART II

ITEM  5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND
         ISSUER PURCHASES OF EQUITY SECURITIES

      (a) Market Information.

      IEC's Common Stock is listed on The Over the Counter Bulletin Board
("OTCBB") under the symbol IECE.OB.

      The following table sets forth, for the fiscal quarter indicated, the high
and low closing prices for the Common Stock as reported on the OTCBB. These
quotations reflect inter-dealer prices, without mark-up, mark-down or
commission, and may not represent actual transactions.

Quarter                                High     Low
-------                               ------   -----
October 1, 2004 - December 31, 2004    $0.75   $0.43
January 1, 2005 - April 1, 2005        $0.78   $0.45
April 2, 2005 - July 1, 2005           $0.68   $0.43
July 2, 2005  - September 30, 2005     $0.85   $0.51
October 1, 2005 - December 30, 2005    $0.74   $0.41
December 31, 2005 - March 31, 2006     $0.93   $0.55
April 1, 2005 - June 30, 2006          $0.85   $0.60
July 1, 2006 - September 30, 2006      $1.15   $0.77

The closing price of IEC's Common Stock on the OTCBB on November 9, 2006, was
$1.30 per share.

      (b) Holders.

      As of November 9, 2006, there were approximately 149 holders of record of
IEC's Common Stock. Many of our shares of Common Stock are held by brokers and
other institutions, and we are unable to estimate the number of these
stockholders.

      (c) Dividends.

      IEC has never paid dividends on its Common Stock. It is the current policy
of the Board of Directors of IEC to retain earnings for use in our business.
Certain financial covenants set forth in IEC's current loan agreement prohibit
IEC from paying cash dividends. We do not plan to pay cash dividends on our
Common Stock in the foreseeable future.

      (d) Securities Authorized for Issuance under Equity Compensation Plans

      The following table sets forth information concerning IEC's equity
compensation plans as of September 30, 2006.

<TABLE>
<CAPTION>
                                                                                      Number of securities
                                     Number of securities                           remaining available for
                                       to be issued upon       Weighted-average     future issuance under
                                          exercise of         exercise price of    equity compensation plans
                                     outstanding options,   outstanding options,     (excluding securities
        Plan Category                 warrants and rights    warrants and rights    reflected in column (a))
----------------------------------   --------------------   --------------------   -------------------------
                                               (a)                   (b)                      (c)
<S>                                        <C>                      <C>                     <C>
Equity compensation plans:
approved by security holders               1,459,459                $0.68                   363,440
not approved by security holders                  --                   NA                        --
Total                                      1,459,459                $0.68                   363,440
</TABLE>

Issuance of Unregistered Securities:   Not Applicable

Repurchases of IEC Securities:         We repurchased no shares during the last
                                       quarter of fiscal 2006.


                                  Page 11 of 38

<PAGE>

Item 6. SELECTED CONSOLIDATED FINANCIAL DATA

                      SELECTED CONSOLIDATED FINANCIAL DATA
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
Years Ended September 30,            2006      2005      2004      2003      2002
-------------------------          -------   -------   -------   -------   --------
<S>                                <C>       <C>       <C>       <C>       <C>
INCOME STATEMENT DATA
Net sales                          $22,620   $19,066   $27,701   $48,201   $ 39,365
Gross profit (loss)                $ 2,753   $ 2,630   $ 1,987   $ 5,508   $  2,297
Operating income (loss)            $   598   $   346   $  (759)  $ 2,652   $ (3,026)
Net income (loss)                  $   215   $   285   $  (828)  $ 2,597   $(10,979)
Net income (loss) per common and
  common equivalent share:
    Basic                          $  0.03   $  0.03   $ (0.10)  $  0.33   $  (1.43)
    Diluted                        $  0.03   $  0.03   $ (0.10)  $  0.31   $  (1.43)
Common and common
equivalent shares
    Basic                            7,973     8,261     8,119     7,899      7,692
    Diluted                          8,276     8,571     8,119     8,274      7,692
BALANCE SHEET DATA
Working capital (deficiency)       $ 2,202   $ 2,038   $   726   $ 1,428   $ (3,572)
Total assets                       $11,718   $ 5,538   $ 8,530   $10,506   $ 15,065
Long-term debt, including
  current maturities               $ 4,164   $   937   $ 2,366   $ 2,667   $  4,396
Shareholders' equity               $ 3,092   $ 3,020   $ 2,616   $ 3,414   $    799
</TABLE>


                                  Page 12 of 38

<PAGE>

ITEM  7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

                      MANAGEMENT'S DISCUSSION OF OPERATIONS

      The information in this Management's Discussion & Analysis should be read
in conjunction with the accompanying consolidated financial statements, the
related Notes to Financial Statements and the Five-Year Summary of Financial
Data. Forward-looking statements in this Management's Discussion and Analysis
are qualified by the cautionary statement preceding Item 1 of this Form 10K.

Overview

      During 2003, we received notification from our largest customer that they
planned to move most of their contract assembly work offshore. During 2004, we
received similar notification from our second largest customer. We subsequently
restructured our organization to align resources more closely with our customer
requirements. We refocused our sales efforts on high technology products that
are less likely to migrate to offshore suppliers. We have since added several
new customers that have contributed to our sales growth. Our backlog has grown
to it highest level since the restructuring, and we expect revenue and
profitability growth to continue in 2007.

Analysis of Operations

Sales (dollars in millions)

For Year Ended September 30,     2006    2005    2004
----------------------------    -----   -----   -----
Net sales                       $22.6   $19.1   $27.7

      The 19% increase in fiscal 2006 net sales compared to fiscal year 2005 was
due to the addition of several new customers. The 31% decrease in fiscal 2005
net sales compared to fiscal year 2004 was primarily due to a reduction in
business from two major customers that accounted for more than 50% of our 2004
business.

Gross Profit and Selling and Administrative Expenses
(as a % of Net Sales)

For Year Ended September 30,          2006   2005   2004
----------------------------          ----   ----   ----
Gross profit                          12.1%  13.8%  7.2%
Selling and administrative expenses    9.5%  11.4%  9.0%

      Gross profit as a percentage of sales was 12.1% in fiscal 2006 as compared
to 13.8% in fiscal 2005. The decrease was primarily due to product mix. Material
cost as a percent of sales is much higher on some of our new large volume
orders.

      Gross profit as a percentage of sales was 13.8% in fiscal 2005 as compared
to 7.2% in fiscal 2004. The increase was attributable to favorable product mix
and productivity gains associated with our restructuring efforts. The
improvement was also due in part to high bad debt expense during fiscal 2004.

      Selling and administrative expenses as a percentage of sales decreased to
9.5% in fiscal 2006 compared to 11.4% in fiscal 2005. Expenses were relatively
flat year over year, but they were lower on a percentage basis during 2006 due
to higher sales volumes.

      Selling and administrative expenses decreased by $0.3 million in fiscal
2005 compared to fiscal 2004. As a percentage of sales, selling and
administrative expenses increased to 11.4% in fiscal 2005 compared to 9.0% in
fiscal 2004. The percentage increase was due to expenses being spread over fewer
sales dollars.


                                  Page 13 of 38

<PAGE>

Other Income and Expense  (dollars in millions)

For Year Ended September 30,     2006   2005   2004
----------------------------     ----   ----   ----
Interest and financing expense   $0.4   $0.4   $0.4
Other income                     $ --   $0.3   $0.3

      Interest and financing expense was $0.4 million during 2006, 2005 and
2004. The average debt balance was higher in 2006 compared to 2005, resulting in
a $99,000 increase in interest expense. This was offset by $99,000 in reduced
fees and amortization of loan origination costs.

      The average debt was lower in 2005 compared to 2004, but interest expense
was relatively flat on a year over year basis. This is because the reported
figure includes both interest on money that is being borrowed at negotiated
rates of interest, plus fees and amortization of loan origination costs. The
fees and amortization costs were relatively fixed over both periods.

      We had other income of $0.3 million during both fiscal 2005 and 2004.
Other income during those periods was primarily attributable to gains on the
sale of excess equipment.

Income Taxes (as a % of income (loss) before income taxes)

For Year Ended September 30,   2006   2005   2004
----------------------------   ----   ----   ----
Effective tax rate              --%    --%    --%

We continue to maintain a $20 million valuation allowance against our net
deferred tax assets including the net operating loss carryforward.

Restructuring Charge (dollars in millions)

For Year Ended September 30,   2006   2005   2004
----------------------------   ----   ----   ----
                               $0.0   $0.1   $0.3

      During May 2004, the Company commenced a restructuring initiative in an
attempt to more closely align resources to customer requirements. The Company
recorded $119,000 of expenses during fiscal 2005, and $257,000 of expenses
during fiscal 2004. The restructuring resulted in the reduction of 57 employees.
The annual savings to IEC was $1,865,000. All payments were made by November 30,
2005. The Company has subsequently resumed growth in revenues and employment
levels.

Liquidity and Capital Resources

      Cash Flow provided by (used in) operating activities was ($3.1) million
for the fiscal year ended September 30, 2006 compared to $1.9 million and ($0.7)
million for fiscal 2005 and fiscal 2004 respectively. During fiscal 2006, we
also used $407,000 to purchase new equipment (investing activities) and $212,000
to repurchase Company stock (financing activities). The decrease in operating
cash flows for fiscal 2006 compared to fiscal 2005 was due to higher accounts
receivable and inventory related to a substantial increase in customer orders.
The increase in operating cash flows for fiscal 2005 compared to fiscal 2004 was
due to lower accounts receivable and inventory related to a modest decrease in
customer orders.

      Working capital at September 30, 2006 was $2.2 million, compared to $2.0
million in the same period of the prior year. At September 30, 2006 we had a
$3.6 million balance under our revolving credit facility. The maximum borrowing
limit under our revolving credit facility is limited to the lesser of (i) $5.5
million or (ii) an amount equal to the sum of 85% of the receivables borrowing
base and 35% of the inventory borrowing base. On September 30, 2006, the
remaining availability under the collateralized portion of our line of credit
was $0.9 million. We also had access to a $1.0 million overline that was not
being utilized on September 30, 2006. Additional availability on the overline
was $0.4 million on September 30, 2006. We believe that our liquidity is
adequate to cover operating requirements for the next 12 months.

      We also have a term loan of $535,000 that is secured by a first mortgage
on the IEC plant in Newark, New York. The loan is payable in 39 monthly
installments of $12,500 that commenced October 1, 2005, and a final payment of
the remaining balance on January 1, 2009. The loan has an interest rate of prime
plus 1.0%.

      The financing agreements contain various affirmative and negative
covenants including, among others, limitations on the amount available under the
revolving line of credit relative to the borrowing base, capital expenditures,
and minimum earnings before interest, taxes, depreciation and amortization
(EBITDA). We were compliant with these covenants at September 30, 2006.


                                  Page 14 of 38

<PAGE>

Application of Critical Accounting Policies

      Our financial statements and accompanying notes are prepared in accordance
with generally accepted accounting principles in the United States. Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue, and expenses. These
estimates and assumptions are affected by management's application of accounting
policies. Critical accounting policies for us include revenue recognition,
impairment of long-lived assets, accounting for legal contingencies and
accounting for income taxes.

      We recognize revenue in accordance with Staff Accounting Bulletin No.101,
"Revenue Recognition in Financial Statements." Sales are recorded when products
are shipped to customers. Provisions for discounts and rebates to customers,
estimated returns and allowances and other adjustments are provided for in the
same period the related sales are recorded.

      We evaluate our long-lived assets for financial impairment on a regular
basis in accordance with Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets." We evaluate
the recoverability of long-lived assets not held for sale by measuring the
carrying amount of the assets against the estimated discounted future cash flows
associated with them. At the time such evaluations indicate that the future
discounted cash flows of certain long-lived assets are not sufficient to recover
the carrying value of such assets, the assets are adjusted to their fair values.

      We are subject to various legal proceedings and claims, the outcomes of
which are subject to significant uncertainty. Statement of Financial Accounting
Standards No. 5, "Accounting for Contingencies", requires that an estimated loss
from a loss contingency should be accrued by a charge to income if it is
probable that an asset has been impaired or a liability has been incurred and
the amount of the loss can be reasonably estimated.

      Disclosure of a contingency is required if there is at least a reasonable
possibility that a loss has been incurred. We evaluate, among other factors, the
degree of probability of an unfavorable outcome and the ability to make a
reasonable estimate of the amount of loss. Changes in these factors could
materially impact our financial position or our results of operations.

      Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes," establishes financial accounting and reporting standards for the
effect of income taxes. The objectives of accounting for income taxes are to
recognize the amount of taxes payable or refundable for the current year and
deferred tax liabilities and assets for the future tax consequences of events
that have been recognized in an entity's financial statements or tax returns.
Judgment is required in assessing the future tax consequences of events that
have been recognized in IEC's financial statements or tax returns. Fluctuations
in the actual outcome of these future tax consequences could materially impact
IEC's financial position or its results of operations.

Impact of Inflation

      The impact of inflation on our operations has been minimal due to the fact
that we are able to adjust our bids to reflect any inflationary increases in
cost.

RECENTLY ISSUED ACCOUNTING STANDARDS

      In September 2006, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standard ("SFAS") No. 157, "Fair Value
Measurements". SFAS 157 defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements.
SFAS 157 is effective as of the beginning of the first fiscal year that begins
after November 15, 2007. As such, the Company is required to adopt these
provisions at the beginning of the fiscal year ended September 30, 2009. The
Company is currently evaluating the impact of SFAS 157 on its consolidated
financial statements, but the Company does not expect this to have a material
impact.

      In November 2004, the FASB issued SFAS No. 151 "Inventory Costs" (SFAS
151). This statement amends the guidance in ARB No. 43, Chapter 4, "Inventory
Pricing," to clarify the accounting for abnormal amounts of idle facility
expense, freight, handling costs, and wasted material (spoilage). SFAS 151
requires that those items be recognized as current-period charges. In addition,
this Statement requires that allocation of fixed production overheads to costs
of conversion be based upon the normal capacity of the production facilities.
The provisions of SFAS 151 are effective for inventory cost incurred in fiscal
years beginning after June 15, 2005. The Company has adopted these provisions at
the beginning of fiscal 2006. The adoption of SFAS No. 151 had no impact on our
financial statements.


                                  Page 15 of 38

<PAGE>

      On December 16, 2004, the FASB issued SFAS No. 153, "Exchanges of
Nonmonetary Assets, an amendment of APB Opinion No. 29". SFAS No. 153 replaces
the exception from fair value measurement in APB Opinion No. 29 for nonmonetary
exchanges of similar productive assets with a general exception from fair value
measurement for exchanges of nonmonetary assets that do not have commercial
substance. A nonmonetary exchange has commercial substance if the future cash
flows of the entity are expected to change significantly as a result of the
exchange. SFAS No. 153 is to be applied prospectively, and is effective for
nonmonetary asset exchanges occurring in fiscal periods beginning after the date
of issuance of SFAS No. 153. The adoption of SFAS No. 153 had no impact on our
financial statements.

      In December 2004, the FASB issued SFAS No. 123R, Share Based Payments,
which requires companies to measure compensation cost for all share-based
payments, including employee stock options. SFAS No. 123R was effective as of
the first fiscal period beginning after June 15, 2005. In March 2005, the SEC
issued SAB No. 107 regarding the SEC's interpretation of SFAS No. 123R and the
valuation of share-based payments for public companies. The Company adopted SFAS
No. 123R on October 1, 2005, and the adoption did not have a material impact on
the Company's financial statements. See Note 3 to these financial statements for
further discussion regarding stock based compensation.

      In June 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections", a replacement of APB Opinion No. 20, "Accounting Changes", and
SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements". SFAS
No. 154 changes the requirements of the accounting for and reporting of a change
in accounting principle. Previously, most voluntary changes in accounting
principles required recognition via a cumulative effect adjustment within net
income of the period of the change. SFAS No. 154 requires retrospective
application to prior periods' financial statements, unless it is impractical to
determine either the period-specific effects or the cumulative effect of the
change. SFAS No. 154 is effective for accounting changes made in fiscal years
beginning after December 15, 2005; however, the Statement does not change the
transition provisions of any of the existing accounting pronouncements. We do
not believe adoption of SFAS No. 154 will have a material effect on our
consolidated financial position, results of operations or cash flows.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      Quantitative and Qualitative Disclosures about Market Risk represents the
risk of loss that may impact the consolidated financial position, results of
operations or cash flows of IEC due to adverse changes in financial rates. We
are exposed to market risk in the area of interest rates. One exposure is
directly related to our Term Loan and Revolving Credit borrowings under the
Credit Agreement, due to their variable interest rate pricing. Management
believes that interest rate fluctuations will not have a material impact on
IEC's results of operations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The information required by this item is incorporated herein by reference
to pages 25 through 35 of this Form 10-K and is indexed under Item 15(a)(1) and
(2).

ITEM  9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

      There have been no disagreements on accounting and financial disclosure
matters.

ITEM 9A CONTROLS AND PROCEDURES

      (a) Evaluation of disclosure controls and procedures

      An evaluation was performed under the supervision and with the
participation of IEC's management, including our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures as of the end of the period covered by this
Annual Report on Form 10-K as required by Rule 13a-15 under the Securities
Exchange Act of 1934 (the "Exchange Act"). Based on that evaluation, our Chief
Executive Officer and Chief Financial Officer have concluded that IEC's
disclosure controls and procedures are effective as of the end of the period
covered by this Annual Report on Form 10-K to provide reasonable assurance that
information required to be disclosed by IEC in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time period specified in the SEC rules and forms and that such
information is accumulated and communicated to our management (including the
Chief Executive Officer and Chief Financial Officer) to allow timely decisions
regarding disclosures.

      (b) Changes in internal control over financial reporting

      In connection with the evaluation described above, our management,
including our Chief Executive Officer and Chief Financial Officer, identified no
change in our internal control over financial reporting that occurred during our
fiscal quarter ended September 30, 2006, that materially affected, or is
reasonably likely to materially affect, our internal controls over financial
reporting.

ITEM 9B OTHER INFORMATION

      None


                                  Page 16 of 38

<PAGE>

                                    PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

      The information required by this item is presented under the caption
entitled "Election of Directors - Nominees for Election as Directors" contained
in the definitive proxy statement issued in connection with the 2007 annual
Meeting of Stockholders and is incorporated in this report by reference thereto.
The information regarding Executive Officers of the Registrant is found in Part
I of this report.

      IEC has adopted a Code of Business Conduct and Ethics (the "Code"), which
applies to all of its directors, officers (including IEC's Chief Executive
Officer, Chief Financial Officer, and other senior financial officers), and
employees. The Code, a copy of which was filed as Exhibit 14 to IEC's Current
Report on Form 8-K filed on September 1, 2004, may be viewed on IEC's website,
www.iec-electronics.com, under its "Investor Relations - Corporate Governance"
captions, and is available in print (free of charge) to any person upon request
to Chief Financial Officer, IEC Electronics Corp., 105 Norton Street, Newark, NY
14513, telephone (315) 331-7742. Any amendment to, or waiver of, a provision of
the Code which applies to IEC's Chief Executive Officer, Chief Financial
Officer, or other senior financial officers and relates to the elements of a
"code of ethics" as defined by the Securities and Exchange Commission will also
be posted on the website.

ITEM 11. EXECUTIVE COMPENSATION

      The information required by this item is presented under the caption
entitled "Executive Officer Compensation" contained in the definitive proxy
statement issued in connection with the 2007 Annual Meeting of Stockholders and
is incorporated in this report by reference thereto, except, however, the
sections entitled "Performance Graph" and "Report of the Compensation Committee
of the Board of Directors" are not incorporated in this report by reference.

ITEM  12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS MANAGEMENT AND RELATED
          STOCKHOLDER MATTERS

      The information required by this item is presented under the caption
entitled "Security Ownership of Certain Beneficial Owners and Management"
contained in the definitive proxy statement issued in connection with the 2007
Annual Meeting of Stockholders and is incorporated in this report by reference
thereto.

ITEM  13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
          INDEPENDENCE

      The information required by this item is presented under the caption
"Executive Officer Compensation - Certain Transactions" contained in the
definitive proxy statement issued in connection with the 2007 Annual Meeting of
Stockholders and is incorporated in this report by reference thereto.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

      The information required by this item is presented under the caption
"Independent Public Accountants" contained in the definitive proxy statement
issued in connection with the 2007 Annual Meeting of Stockholders and is
incorporated in this report by reference thereto.

                                     PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

      (a)   The following documents are filed as part of this report and as
            response to Item 8:

<TABLE>
<CAPTION>
                                                                                   Page
                                                                                   ----
<S>                                                                                 <C>
      (1)   Financial Statements and Supplementary Schedules
              Report of Independent Public Accountants..........................     22
              Consolidated Balance Sheets as of
                September 30, 2006 and 2005.....................................     23
              Consolidated Statements of Operations for the years
                ended  September 30, 2006, 2005 and 2004 .......................     24
              Consolidated Statements of Comprehensive Income (Loss) and
                Shareholders' Equity for the years ended September 30, 2006,
                  2005 and 2004.................................................     25
              Consolidated Statements of Cash Flows for the years
                ended September 30, 2006, 2005 and 2004.........................     26
              Notes to Consolidated Financial Statements........................     27
              Selected Quarterly Financial Data (unaudited).....................     35
</TABLE>

            All other schedules are either inapplicable or the information is
            included in the financial statements and, therefore, have been
            omitted.


                                  Page 17 of 38

<PAGE>

<TABLE>
<S>                                                                                 <C>
       (2)  Financial Statement Schedules required to be filed by Item 8
              of this Form 10-K:
              Valuation of Qualifying Accounts..................................     35
       (3)  Exhibits
</TABLE>

Exhibit No.                              Title
-----------   ------------------------------------------------------------------
3.1           Amended and Restated Certificate of Incorporation of DFT Holdings
              Corp. (Incorporated by reference to Exhibit 3.1 to the Company's
              Registration Statement on Form S-1, Registration No. 33-56498)

3.2           Amended Bylaws of IEC Electronics Corp. (Incorporated by reference
              to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the
              year ended September 30, 2002).

3.3           Agreement and Plan of Merger of IEC Electronics into DFT Holdings
              Corp. (Incorporated by reference to Exhibit 3.3 to the Company's
              Registration Statement on Form S-1, Registration No. 33-56498)

3.4           Certificate of Merger of IEC Electronics Corp. into DFT Holdings
              Corp. - New York. (Incorporated by reference to Exhibit 3.4 to the
              Company's Registration Statement on Form S-1, Registration No.
              33-56498)

3.5           Certificate of Ownership and Merger merging IEC Electronics Corp.
              into DFT Holdings Corp. - Delaware. (Incorporated by reference to
              Exhibit 3.5 to the Company's Registration Statement on Form S-1,
              Registration No. 33-56498)

3.6           Certificate of Merger of IEC Acquisition Corp. into IEC
              Electronics Corp. (Incorporated by reference to Exhibit 3.6 to the
              Company's Registration Statement on Form S-1, Registration No.
              33-56498)

3.7           Certificate of Amendment of Certificate of Incorporation of IEC
              Electronics Corp. filed with the Secretary of State of the State
              of Delaware on Feb. 26, 1998 (Incorporated by reference to Exhibit
              3.1 to the Company's Quarterly Report on Form 10-Q for the Quarter
              ended March 27, 1998)

3.8           Certificate of Designations of the Series A Preferred Stock of IEC
              Electronics Corp. filed with the Secretary of State of the State
              of Delaware on June 3, 1998. (Incorporated by reference to Exhibit
              3.8 of the Company's Annual Report on Form 10-K for the year ended
              September 30, 1998)

4.1           Specimen of Certificate for Common Stock. (Incorporated by
              reference to Exhibit 4.1 to the Company's Registration Statement
              on Form S-1, Registration No. 33-56498)

4.2           Rights Agreement dated as of June 2, 1998 between IEC Electronics
              Corp. and ChaseMellon Shareholder Services. LLC., as Rights Agents
              (Incorporated by reference to Exhibit 4.1 to the Company's Current
              Report on Form 8-K dated June 2, 1998)

10.1*         Form of Indemnity Agreement. (Incorporated by reference to Exhibit
              10.2 to the Company's Quarterly Report on Form 10-Q for the
              quarter ended July 2, 1993)

10.2*         IEC Electronics Corp. 1993 Stock Option Plan, as amended
              (Incorporated by reference to Exhibit 10.9 to the Company's Annual
              Report on Form 10-K for the year ended September 30, 1998)

10.3*         Form of Incentive Stock Option Agreement (Incorporated by
              reference to Exhibit 4.2 to the Company's Registration Statement
              on Form S-8, Registration No. 33-79360)

10.4*         Form of Non-Statutory Stock Option Agreement (Incorporated by
              reference to Exhibit 4.3 to the Company's Registration Statement
              on Form S-8, Registration No. 33-79360)

10.5*         Form of Non-Employee Director Stock Option Agreement (Incorporated
              by reference to Exhibit 4.4 to the Company's Registration
              Statement on Form S-8, Registration No. 33-79360)

10.6*         IEC Electronics Corp. 2001 Stock Option and Incentive Plan, as
              amended on November 17, 2004 (Incorporated by reference to Exhibit
              4.1 to the Company's Registration Statement on Form S-8,
              Registration No. 333-122181).

10.7          Loan Agreement between IEC Electronics Corp., and Keltic Financial
              Partners, LLP, dated January 14, 2003 (Incorporated by reference
              to Exhibit 10.28 to the Company's Annual Report on Form 10-K for
              the year ended September 30, 2003)

10.8          First Amendment, dated as of March 23, 2004, to the Loan Agreement
              dated January 14, 2003, by and between Keltic Financial Partners,
              LP and IEC Electronics Corp. (Incorporated by reference to Exhibit
              10.1 to the Company's Quarterly Report on Form 10-Q for the
              quarter ended March 26, 2004).


                                  Page 18 of 38

<PAGE>

10.9          Second Amendment, dated as of January 7, 2005, to the Loan
              Agreement dated January 14, 2003, as amended by the First
              Amendment to the Loan Agreement, dated March 23, 2004, by and
              between Keltic Financial Partners, L.P. and IEC Electronics Corp.
              (Incorporated by reference to Exhibit 10.1 of the Company's
              Current Report on Form 8-K filed on January 13, 2005).

10.10         Third Amendment dated as of September 30, 2005 to Loan Agreement
              dated January 14, 2003, as amended by the First Amendment to the
              Loan Agreement, dated March 23, 2004, and subsequently amended by
              the Second Amendment to the Loan Agreement dated January 7, 2005,
              by and between Keltic Financial Partners, L.P. and IEC Electronics
              Corp. (Incorporated by reference to Exhibit 10.1 of the Company's
              Current Report on Form 8-K filed on October 6, 2005).

10.11         Waiver, dated as of June 25, 2004 to the Loan Agreement, dated
              January 14, 2003, by and between Keltic Financial Partners, LP and
              IEC Electronics Corp.(Incorporated by reference to Exhibit 10.1 to
              the Company's Quarterly Report on Form 10-Q for the quarter ended
              June 25, 2004).

10.12         Fourth Amendment dated as of September 12, 2006 to the Loan
              Agreement dated January 14, 2003, as amended by the First
              Amendment to the Loan Agreement dated March 23, 2004, a Second
              Amendment to the Loan Agreement dated as of January 27, 2005 and a
              Third Amendment to the Loan Agreement dated September 30, 2005, by
              and between IEC Electronics and Keltic Financial Partners, L.P.
              (Incorporated by reference to Exhibit 10.1 of the Company's
              Current Report on Form 8-K filed on October 2, 2006).

10.13*        Form of challenge award option agreement granted to senior
              management in Fiscal 2005 (Incorporated by reference to Exhibit
              10.14 to the Company's Annual Report on Form 10-K for the year
              ended September 30, 2005).

10.14*        Form of Sales Restriction Agreement between IEC Electronics Corp.
              and certain option holders, dated as of August 24,2005
              (Incorporated by reference to Exhibit 10.15 to the Company's
              Annual Report on Form 10-K for the year ended September 30, 2005).

14            Code of Business Conduct and Ethics (Incorporated by Reference to
              Exhibit 14 to the Company's Current Report on Form 8-K filed on
              September 1, 2004)
<TABLE>
<S>                                                                                  <C>
21.1          Subsidiaries of IEC Electronics Corp. ............................     34
23.1          Consent of Rotenberg & Co., LLP  .................................     35
31.1          Certification of Chief Executive Officer Pursuant to
              Section 302 of the Sarbanes-Oxley Act of 2002 ....................     36
31.2          Certification of Chief Financial Officer Pursuant to
              Section 302 of the Sarbanes-Oxley Act of 2002 ....................     37
32.1          Certification of Chief Executive Officer and Chief Financial
                Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
                of 2002.........................................................     38
</TABLE>

*Management contract or compensatory plan or arrangement


                                  Page 19 of 38

<PAGE>

SIGNATURES

      Pursuant to the requirement of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated: November 16, 2006.

                                        IEC Electronics Corp.


                                        By:/s/ W. Barry Gilbert
                                           -------------------------------------
                                           W. Barry Gilbert
                                           Chief Executive Officer and
                                             Chairman of the Board

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Signature                Title                               Date
----------------------   ---------------------------   -----------------

/s/ W. Barry Gilbert     Chief Executive Officer and   November 16, 2006
----------------------   Chairman of the Board
(W. Barry Gilbert)


/s/ Brian H. Davis       Vice President,               November 16, 2006
----------------------   Chief Financial Officer
(Brian H. Davis)         and Controller


                         Director                      November 16, 2006
----------------------
(David J. Beaubien)


/s/Jerold L. Zimmerman   Director                      November 16, 2006
----------------------
(Jerold L. Zimmerman)


/s/Eben S. Moulton       Director                      November 16, 2006
----------------------
(Eben S. Moulton)


/s/Justin L. Vigdor      Director                      November 16, 2006
----------------------
(Justin L. Vigdor)


/s/James C. Rowe         Director                      November 16, 2006
----------------------
(James C. Rowe)


                                  Page 20 of 38
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
  and Stockholders
IEC Electronics Corp.
Newark, New York

      We have audited the accompanying consolidated balance sheets of IEC
Electronics Corp. and Subsidiaries (a Delaware corporation) as of September 30,
2006 and 2005, and the related consolidated statements of operations,
comprehensive income (loss) and shareholders' equity, and cash flows for each of
the three years in the period ended September 30, 2006. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

      We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

      In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of IEC
Electronics Corp. and Subsidiaries as of September 30, 2006 and 2005, and the
results of its operations and its cash flows for each of the three years in the
period ended September 30, 2006, in conformity with accounting principles
generally accepted in the United States of America.


/s/ Rotenberg & Co., LLP
----------------------------
Rotenberg & Co., LLP
Rochester, New York
  October 26, 2006


                                  Page 21 of 38

<PAGE>

                     IEC ELECTRONICS CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           SEPTEMBER 30, 2006 AND 2005
                                 (in thousands)

                                     ASSETS

                                                      2006       2005
                                                    --------   --------
CURRENT ASSETS:
  Cash                                              $     --   $    461
  Accounts receivable (net allowance for doubtful      4,941      2,344
   Accounts of $59 and $35 respectively)
  Inventories                                          5,114        630
  Deferred income taxes                                  250        250
  Other current assets                                   124        279
                                                    --------   --------
    Total Current Assets                              10,429      3,964
FIXED ASSETS:
  Land and land improvements                        $    707        707
  Building and improvements                            4,089      4,080
  Machinery and equipment                             22,164     22,582
  Furniture and fixtures                               4,170      4,138
                                                    --------   --------
SUB-TOTAL GROSS PROPERTY                              31,130     31,507
LESS ACCUMULATED DEPRECIATION                        (29,870)   (30,000)
                                                    --------   --------
                                                       1,260      1,507
OTHER NON-CURRENT ASSETS                                  29         67
                                                    --------   --------
    Total Assets                                    $ 11,718   $  5,538

                      LIABILITIES AND SHAREHOLDERS' EQUITY

                                                        2006       2005
                                                      --------   --------
CURRENT LIABILITIES:
  Short term borrowings                               $  3,765   $    345
  Accounts payable                                       3,853        918
  Accrued payroll and related expenses                     265        264
  Other accrued expenses                                   344        399
                                                      --------   --------
      Total current liabilities                          8,227      1,926
Long term vendor payable                                    14         57
Long term bank debt                                        385        535
                                                      --------   --------
TOTAL LIABILITIES                                        8,626      2,518
SHAREHOLDERS' EQUITY:
  Preferred stock, $.01 par value, Authorized
    - 500,000 shares; Issued and outstanding - none         --         --
  Common stock, $.01 par value, Authorized
    - 50,000,000 shares; Issued - 8,401,133 and
    8,292,450 shares                                        84         83
  Treasury Shares at Cost 412,873 and 573 shares          (223)       (11)
  Additional paid-in capital                            38,601     38,533
  Accumulated deficit                                  (35,370)   (35,585)
                                                      --------   --------
      Total shareholders' equity                         3,092      3,020
                                                      --------   --------
                                                      $ 11,718   $  5,538

The accompanying notes are an integral part of these financial statements.


                                  Page 22 of 38

<PAGE>

                     IEC ELECTRONICS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED SEPTEMBER 30, 2006, 2005 AND 2004
                 (in thousands, except per share and share data)

<TABLE>
<CAPTION>
                                               2006         2005         2004
                                            ----------   ----------   ----------
<S>                                         <C>          <C>          <C>
Net sales                                   $   22,620   $   19,066   $   27,701
Cost of sales                                   19,867       16,436       25,714
                                            ----------   ----------   ----------
  Gross profit                                   2,753        2,630        1,987
Operating expenses
  Selling and administrative expenses            2,155        2,165        2,489
  Restructuring charge                              --          119          257
                                            ----------   ----------   ----------
  Total operating expenses                       2,155        2,284        2,746
  Operating income (loss)                          598          346         (759)
  Interest and financing expense                  (378)        (363)        (386)
  Other income                                      (5)         302          316
                                            ----------   ----------   ----------
Net income (loss) before income taxes              215          285         (828)
(Benefit from) provision for income taxes           --           --           --
                                            ----------   ----------   ----------
Net income (loss)                           $      215          285   $     (828)
Net income (loss) per common and common
  equivalent share:
  Basic Income (loss) available to
    common shareholders                     $     0.03   $     0.03   $    (0.10)
  Diluted Income (loss) available to
    common shareholders                     $     0.03   $     0.03   $    (0.10)
Weighted average number of common and
  common equivalent shares outstanding:
  Basic                                      7,973,199    8,260,595    8,118,587
  Diluted                                    8,275,961    8,570,520    8,118,587
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                  Page 23 of 38
<PAGE>

                     IEC ELECTRONICS CORP. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) AND SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED SEPTEMBER 30, 2006, 2005 AND 2004
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                Accumulated
                                                                                  Other
                                                      Additional    Retained   Comprehensive                  Total
                             Comprehensive   Common     Paid-In     Earnings      Income       Treasury   Shareholders
                             Income (Loss)    Stock     Capital    (Deficit)      (Loss)         Stock      Equity
                             -------------   ------   ----------   ---------   -------------   --------   ------------
<S>                              <C>           <C>      <C>        <C>             <C>           <C>         <C>
BALANCE,
  September 30, 2003                           $80      $38,479    $(35,042)       $(92)         $ (11)      $3,414
Shares issued under
  Directors and Employee
  Stock Plan                                   $ 2      $    28          --          --             --       $   30
Net Loss                         $(828)         --           --    $   (828)         --             --       $ (828)
Other comprehensive
  Loss, currency
  translation adjustments        $  --          --           --          --        $ --             --       $   --
                                 -----         ---      -------    --------        ----          -----       ------
Comprehensive income             $(828)
BALANCE,
  September 30, 2004                           $82      $38,507    $(35,870)       $(92)         $ (11)      $2,616
Shares issued under
  Directors and Employee
  Stock Plan                                   $ 1      $    26          --          --             --       $   27
Net Income                       $ 285          --           --    $    285          --             --       $  285
Other comprehensive
  Income, currency
  translation adjustments        $  92          --           --          --        $ 92             --       $   92
                                 -----         ---      -------    --------        ----          -----       ------
Comprehensive income             $ 377
BALANCE,
  September 30, 2005                           $83      $38,533    $(35,585)       $ --          $ (11)      $3,020
Shares issued and expensed
  Under Directors and
  Employee Stock Plan                          $ 1      $    68          --          --             --       $   69
Net Income                       $ 215          --           --    $    215          --             --       $  215
Purchase of Treasury
  Stock                                         --           --          --          --          $(212)      $ (212)
Other comprehensive
  Income, currency
  translation adjustments        $  --          --           --          --        $ --          $  --       $   --
                                 -----         ---      -------    --------        ----          -----       ------
Comprehensive income             $ 215
BALANCE,
  September 30, 2006                           $84      $38,601    $(35,370)       $ --          $(223)      $3,092
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                  Page 24 of 38

<PAGE>

                     IEC ELECTRONICS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED SEPTEMBER 30, 2006, 2005 AND 2004
                                 (in thousands)

<TABLE>
<CAPTION>
                                                       2006      2005      2004
                                                     -------   -------   -------
<S>                                                  <C>       <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                  $   215   $   285   $  (828)
  Non-cash adjustments:
    Compensation Expense - Stock Options                  27        --        --
    (Income) from discontinued operations                 --       (28)       --
    Depreciation and amortization                        676     1,016     1,138
    (Gain) loss on sale of fixed assets                    5      (270)     (298)
    Issuance of directors fees in stock                   27        21        17
    Changes in operating assets and
      liabilities:
      Accounts receivable                             (2,597)    1,366       294
      Inventories                                     (4,484)    1,253      (249)
      Deferred income taxes                               --        --        --
      Other current assets                               155         3        46
      Accounts payable                                 2,935    (1,336)     (487)
      Accrued expenses                                   (54)     (459)     (323)
                                                     -------   -------   -------
      Net cash flows from operating activities        (3,095)    1,851      (690)
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment            (407)     (239)     (113)
  Proceeds from sale of property                          11       270       298
                                                     -------   -------   -------
      Net cash flows from investing activities          (396)       31       185
CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayments under loan agreements                      (346)     (403)   (1,326)
  Borrowings (payments) on line of credit              3,573    (1,025)    1,025
  Purchase of Treasury Stock                            (212)       --        --
  Proceeds from exercise of stock options                 15         7        13
                                                     -------   -------   -------
      Net cash flows from financing activities         3,030    (1,421)     (288)
Change in cash and cash equivalents                     (461)      461      (793)
Cash and cash equivalents, beginning of year             461        --       793
                                                     -------   -------   -------
Cash and cash equivalents, end of year               $    --   $   461   $    --
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the year for:
      Interest                                       $   340   $   260   $   386
      Income taxes, net of refunds received          $    --   $    --   $    --
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                  Page 25 of 38

<PAGE>

                     IEC ELECTRONICS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        SEPTEMBER 30, 2006, 2005 AND 2004

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Business

      IEC Electronics Corp. ("IEC", the "Company") is an independent electronics
manufacturing services("EMS") provider of complex printed circuit board
assemblies and electronic products and systems. The Company is a significant
provider of high quality electronics manufacturing services with
state-of-the-art manufacturing capabilities. Utilizing computer controlled
manufacturing and test machinery and equipment, the Company provides
manufacturing services employing surface mount technology ("SMT") and
pin-through-hole ("PTH") interconnection technologies. As an independent
full-service EMS provider, the Company offers its customers a wide range of
manufacturing and management services, on either a turnkey or consignment basis,
including design, prototype, material procurement and control, manufacturing and
test engineering support, statistical quality assurance, complete resource
management and distribution. The Company's strategy is to cultivate strong
manufacturing relationships with established and emerging original equipment
manufacturers ("OEMs").

Consolidation

      All significant intercompany transactions and accounts have been
eliminated.

Revenue Recognition

      The Company's net revenue is derived from the sale of electronic products
built to customer specifications. The Company also derives revenue from design
services and repair work. Revenue from sales is generally recognized, net of
estimated product return costs, when goods are shipped; title and risk of
ownership have passed; the price to the buyer is fixed or determinable; and
recovery is reasonable assured. Service related revenues are recognized upon
completion of the services. The Company assumes no significant obligations after
product shipment.

Allowance for Doubtful Accounts

      The Company establishes an allowance for uncollectable trade accounts
receivable based on the age of outstanding invoices and management's evaluation
of collectibility of outstanding balances.

Cash and Cash Equivalents

      Cash and cash equivalents include highly liquid investments with original
maturities of three months or less. The Company's cash and cash equivalents are
held and managed by institutions which follow the Company's investment policy.
The fair value of the Company's financial instruments approximates carrying
amounts due to the relatively short maturities and variable interest rates of
the instruments, which approximate current market interest rates.

Long-Lived Assets

      The Company evaluates its long-lived assets for financial impairment on a
regular basis in accordance with Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets." IEC
evaluates the recoverability of long-lived assets not held for sale by measuring
the carrying amount of the assets against the sum of the undiscounted cash flows
expected to result from the use and eventual disposition of the asset (asset
group).

Fair Value of Financial Instruments

      Financial instruments consist of cash and cash equivalents, accounts
receivable and payable, accrued liabilities, and debt. The carrying amount of
cash and cash equivalents, accounts receivable, accounts payable and accrued
liabilities approximate fair value. The fair value of the Company's debt is
estimated based upon similar market rate debt issues.


                                  Page 26 of 38

<PAGE>

Earnings Per Share

      Net income (loss) per common share is computed in accordance with SFAS No.
128, "Earnings Per Share". Basic earnings per common share are calculated by
dividing income available to common shareholders by the weighted-average number
of common shares outstanding for each period. Diluted earnings per common share
are calculated by adjusting the weighted-average shares outstanding assuming
conversion of all potentially dilutive stock options, warrants and convertible
securities.

Stock Based Compensation

      The Company adopted SFAS No. 123(R) on October 1, 2005 using the modified
Prospective Application Method. Prior to October 1, 2005, the Company accounted
for stock-based awards in accordance with APB Opinion No. 25. For the fiscal
year ended September 30, 2006, the Company recorded stock-based compensation
expense for the cost of stock options issued under its Stock Option and
Incentive Plan. The Company's expensing of stock-based compensation decreased
both our basic and diluted net income per share by less than $0.01 for the
fiscal year ended September 30, 2006.

      Under the provisions of APB Opinion No. 25, the Company was not required
to recognize compensation expense for the cost of stock options. The following
table illustrates the effect on net income and net income per share as if the
Company had applied the fair value recognition provisions of SFAS No. 123, as
amended by SFAS No. 148, Accounting for Stock-Based Compensation -- Transition
and Disclosure for the fiscal years ended September 30 (in thousands, except per
share data):

                                         2005     2004
                                        -----    ------
Net earnings, as reported               $ 285    $ (828)
Deduct: Compensation Cost using the
        Fair value method, net of tax   $(199)   $ (133)
                                        -----    ------
Pro forma net earnings                  $  86    $ (961)
Earnings per share:
  Basic - as reported                   $0.03    $(0.10)
  Basic - pro forma                     $0.01    $(0.12)
  Diluted - as reported                 $0.03    $(0.10)
  Diluted - pro forma                   $0.01    $(0.12)

      During 2006, 2005, and 2004 the Company issued 27,500, 643,000, and
244,000 options, respectively. The fair value of each option issued during these
periods was estimated on the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions:

                              2006      2005      2004
                            -------   -------   -------
Risk free interest rate         4.4%      3.9%      3.4%
Expected term               4 years   4 years   5 years
Volatility                       72%       54%      118%
Expected annual dividends      none      none      none

      The weighted average fair value of options granted during 2006 was $.27
with an aggregate total value of $7,000. The weighted average fair value of
options granted during 2005 was $.54 with an aggregate total value of $201,000.
The weighted average fair value of options granted during 2004 was $1.09 with an
aggregate value of $234,000. There were no dividends. Forfeitures are recognized
as they occur.

      On August 24, 2005, the Board of Directors approved accelerated vesting on
stock options with an exercise price of $0.90 or higher because it was believed
that these options no longer served their intended purpose. Approximately
184,000 options were vested due to this decision.


                                  Page 27 of 38

<PAGE>

Use of Estimates

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts Of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Reclassifications

      Certain amounts in 2005 and 2004 have been reclassified to conform with
the 2006 presentation.

RECENTLY ISSUED ACCOUNTING STANDARDS

      In September 2006, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standard ("SFAS") No. 157, "Fair Value
Measurements". SFAS 157 defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements.
SFAS 157 is effective as of the beginning of the first fiscal year that begins
after November 15, 2007. As such, the Company is required to adopt these
provisions at the beginning of the fiscal year ended September 30, 2009. The
Company is currently evaluating the impact of SFAS 157 on its consolidated
financial statements, but the Company does not expect this to have a material
impact.

      In November 2004, the FASB issued SFAS No. 151 "Inventory Costs" (SFAS
151). This statement amends the guidance in ARB No. 43, Chapter 4, "Inventory
Pricing," to clarify the accounting for abnormal amounts of idle facility
expense, freight, handling costs, and wasted material (spoilage). SFAS 151
requires that those items be recognized as current-period charges. In addition,
this Statement requires that allocation of fixed production overheads to costs
of conversion be based upon the normal capacity of the production facilities.
The provisions of SFAS 151 are effective for inventory cost incurred in fiscal
years beginning after June 15, 2005. The Company has adopted these provisions at
the beginning of fiscal 2006. The adoption of SFAS No. 151 had no impact on our
financial statements.

      On December 16, 2004, the FASB issued SFAS No. 153, "Exchanges of
Nonmonetary Assets, an amendment of APB Opinion No. 29". SFAS No. 153 replaces
the exception from fair value measurement in APB Opinion No. 29 for nonmonetary
exchanges of similar productive assets with a general exception from fair value
measurement for exchanges of nonmonetary assets that do not have commercial
substance. A nonmonetary exchange has commercial substance if the future cash
flows of the entity are expected to change significantly as a result of the
exchange. SFAS No. 153 is to be applied prospectively, and is effective for
nonmonetary asset exchanges occurring in fiscal periods beginning after the date
of issuance of SFAS No. 153. The adoption of SFAS No. 153 had no impact on our
financial statements.

      In December 2004, the FASB issued SFAS No. 123R, Share Based Payments,
which requires companies to measure compensation cost for all share-based
payments, including employee stock options. SFAS No. 123R was effective as of
the first fiscal period beginning after June 15, 2005. In March 2005, the SEC
issued SAB No. 107 regarding the SEC's interpretation of SFAS No. 123R and the
valuation of share-based payments for public companies. The Company adopted SFAS
No. 123R on October 1, 2005, and the adoption did not have a material impact on
the Company's financial statements. See Note 3 to these financial statements for
further discussion regarding stock based compensation.

      In June 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections", a replacement of APB Opinion No. 20, "Accounting Changes", and
SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements". SFAS
No. 154 changes the requirements of the accounting for and reporting of a change
in accounting principle. Previously, most voluntary changes in accounting
principles required recognition via a cumulative effect adjustment within net
income of the period of the change. SFAS No. 154 requires retrospective
application to prior periods' financial statements, unless it is impractical to
determine either the period-specific effects or the cumulative effect of the
change. SFAS No. 154 is effective for accounting changes made in fiscal years
beginning after December 15, 2005; however, the Statement does not change the
transition provisions of any of the existing accounting pronouncements. We do
not believe adoption of SFAS No. 154 will have a material effect on our
consolidated financial position, results of operations or cash flows.

2. INVENTORIES

      Inventories are stated at the lower of weighted average cost (first-in,
first-out) or market. The major classifications of inventories are as follows at
period end (in thousands):

                   2006    2005
                  ------   ----
Raw Materials     $3,270   $432
Work-in-process    1,836    197
Finished goods         8      1
                  ------   ----
                  $5,114   $630


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<PAGE>

3. PROPERTY, PLANT, AND EQUIPMENT

      Property, plant, and equipment are stated at cost and are depreciated over
various estimated useful lives using the straight-line method.

      Maintenance and repairs are charged to expense as incurred; renewals and
improvements are capitalized. At the time of retirement or other disposition of
property, plant, and equipment, the cost and accumulated depreciation are
removed from the accounts and any gain or loss is reflected in other income.

      Depreciation and amortization was $0.7 million, $1.0 million, and $1.1
million for the years ended September 30, 2006, 2005 and 2004, respectively.

      The principal depreciation and amortization lives used are as follows:

                               Estimated
Description                   Useful Lives
--------------------------   -------------
Land improvements                 10 years
Buildings and improvements   5 to 40 years
Machinery and equipment      3 to  5 years
Furniture and fixtures       3 to  7 years

4. RESTRUCTURING

      During May 2004, the Company commenced a restructuring initiative to more
closely align resources to customer requirements. The Company recorded $119,000
of expenses during fiscal 2005, and $257,000 of expenses during fiscal 2004. The
restructuring resulted in the reduction of 57 employees. The annual savings to
IEC was $1,865,000. All payments were made by November 30, 2005. The Company has
subsequently resumed growth in revenues and employment levels.

5. CREDIT FACILITIES:

Debt consists of the following at September 30 (in thousands):

                            2006    2005
                           ------   ----
Short Term Borrowings      $3,765   $345
Long Term Vendor Payable       14     57
Long Term Bank Debt           385    535
                           ------   ----
                           $4,164   $937

      Under the terms of the current agreement with Keltic, IEC has a line of
credit with a maximum borrowing limit up to $5.5 million based upon advances on
eligible accounts receivable and inventory. The Company also has a $0.5 million
term loan that is secured by the Company's real estate. In addition, Keltic will
make additional temporary advances to IEC of up to $1.0 million, provided that
these temporary advances are repaid within 60 days, and that no temporary
advances shall be outstanding for a period of 30 days between each advance. The
loans have an interest rate of prime plus 1%, except for prime plus 2% on
temporary advances. The prime rate at September 30, 2006 was 8.25%. The combined
balance on the Keltic loans at September 30, 2006 was $4.1 million.

      The Keltic loan agreement contains various affirmative and negative
covenants including limitations on the amount available under the revolving line
of credit relative to the borrowing base, capital expenditures, and minimum
earnings before interest, taxes, depreciation and amortization (EBITDA). The
Company was compliant with these covenants as of September 30, 2006.

      Aggregate maturities on term debt are as follows (in thousands):

          Vendor     Real Estate
        Agreements      Loan
        ----------   -----------
2007        $42          $150
2008         11           150
2009          3           235
            ---          ----
Total       $56          $535


                                  Page 29 of 38